Corporation Tax Act 2009 section 134

Purchase or sale of woodlands

Section 134 adjusts the profit calculation for companies dealing in land by excluding the value of growing trees and underwood when woodlands are bought or sold as part of the trade.

• When a land dealer buys UK woodlands, the portion of the purchase cost attributable to growing trees or saleable underwood is excluded from the trade profit calculation.
• When those woodlands are later sold and trees or underwood are still growing on the land, a matching portion of the sale price is also excluded.
• The exclusion exists because profits from commercial woodlands are separately exempt from tax, so a land dealer should not obtain a trade deduction for the cost of the trees nor be taxed on that element through the land dealing trade.
• This rule applies only to woodlands purchased under contracts entered into on or after 1 May 1963.